Negative equity occurs when a vehicle owner owes more than the car is worth. It happens when buyers take out long loans in which payments do not adequately reduce the amount owed to keep pace with depreciation.
You can get an auto loan with little or bad credit, but you will pay more for the privilege. Lenders use your credit score as a primary determining factor for loan approval and in setting interest rates, so the lower your score, the more you’ll pay to get a car loan.
The longer your loan, the more interest you’ll pay, so choosing the shortest loan term you can afford is best. Most terms are between three and six years, but some lenders offer extended terms for more expensive vehicles that can reach eight years or more.
Interest rates are not as generous as they used to be, but occasionally, it’s possible to find a promotional zero-percent rate. You may need to make a down payment, and your credit will need to be almost spotless to qualify.